Question

Question:List the fixed overhead variances, and briefly describe each.

Short answer

Answer

The fixed overhead variances can be in the form of fixed overhead cost variance and fixed overhead volume variance.

Step-by-step solution

Definition of the fixed overhead

Fixed Overhead is defined as the set of costs incurred by the business that does not fluctuate with the change in the income level.

Fixed overhead variance

The fixed overhead variances are as follows:

1. Fixed overhead cost variance: The fixed overhead cost variance that how the company keeps the total fixed overhead cost within the standards set by the business.
2. Fixed Overhead Volume Variance: The fixed overhead volume variance is not a cost variance; instead, it is volume variance that explains whether the fixed overhead is overallocated or under-allocated.